Given Procures SmartPill Assets - Analyst Blog

By: Zacks.com

Posted: 10/8/2012 12:49:00 PM

Referenced Stocks: GE;GIVN;OCPNY

Specialist manufacturer of gastrointestinal products,
Given Imaging Ltd.
(
GIVN
) recently announced the acquisition of assets related to the
SmartPill GI Monitoring System from The SmartPill Corporation for
$6 million.

The acquisition also encloses an earn-out provision, based on
SmartPill sales between 2013 and 2016. However, the company does
not expect any meaningful earn-out payments.

SmartPill is an ingestible capsule which measures pH level,
temperature and pressure in the gastrointestinal tract using sensor
technology. The wireless motility capsule can be used for the
evaluation of gastroparesis and constipation. SmartPill has U.S.
Food and Drug Administration (FDA) and European CE mark approval.

On account of the dominance of Given Imaging in the capsule
endoscopy market, the inclusion of SmartPill in its product
portfolio will strengthen the company's position in the market it
serves. Given Imaging plans to further expand SmartPill's market
with supportive clinical data, marketing efforts and production
optimality for the wireless motility capsule.

The acquisition is slated to be accretive to Given Imaging's
current top-line though the accretion is not expected to be
substantial to its fourth quarter 2012 revenues. For 2013, the
company expects that SmartPill will contribute revenues in low
single-digits. The acquisition is expected to be accretive to the
company's bottom-line by the end of 2014. Acquisition-related costs
will be recognized in 2012.

Meanwhile, Given Imaging is seeking regulatory approval in Japan
for its second generation visual capsule PillCam Colon 2. PillCam
Colon and the company expects to submit the clinical trials for FDA
clearance in the fourth quarter.

However, the video capsule received the European CE Mark in
September 2009. It is also available in Latin America, Canada and
some parts of Asia. Based on market statistics, Given Imaging sees
a $4 billion potential market for its PillCam Colon offering.

Given Imaging currently retains a Zacks #4 Rank, which translates
into a short-term Sell rating. The company's product momentum is a
material upside. However, it operates in a tough competitive
landscape of medical imaging solutions providers such as
Olympus Corporations
(
OCPNY
), GE Healthcare, a division of
General Electric
(
GE
), and the privately-owned FUJIFILM Holdings Corporation.